Tax credit bill for low-income Mainers clears Senate

AUGUSTA – A bill to double a tax credit for low- and moderate-income families passed in the Maine Senate on Thursday in a party-line vote.

But that 19-16 vote, in which independent Sen. Richard Woodbury of Yarmouth, an economist, voted with Republicans, suggests Democrats won’t be able to override a potential veto from Republican Gov. Paul LePage, who won’t get the bill until later this year.

His party’s legislators, except for two in the House, opposed the measure, which passed in the House on Tuesday.

The proposal would move the state’s earned-income tax credit from 5 percent to 10 percent of the federal standard. In the 2012 tax year, the maximum federal earned income credit for a family with two children was $5,236. That family must have earned less than $47,162 if the married couple filed jointly, according to Internal Revenue Service data.

It’s estimated that the Maine bill would cost the state nearly $68 million in revenue through 2017 and likely require hiring two new tax examiners.

The proposal would also make the credit fully refundable if the payer’s tax burden is zero. Currently in Maine, the tax credit is partially refundable, according to the National Conference of State Legislatures.

Democrats have pitched the measure as a targeted tax break for working families.

“We need to think about the difference this could make to people who are working to keep their families safe, well-fed, and in their homes instead of at a soup kitchen or in a shelter,” said Sen. Anne Haskell, D-Portland, in a statement after the vote.

But on the floor, Sen. Douglas Thomas, R-Ripley, said under the proposal, many will have more returned to them in taxes than they pay in.

“We just can’t afford it,” he said.

The bill will now go to the Legislature’s Appropriations Committee, because of its potential cost to the state. Senate Democrats’ spokeswoman Ericka Dodge said the bill will likely be sent to Gov. Paul LePage near the legislative session’s end in June.

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